Before there was Bell and Robert Rizzo, there was Vernon and Bruce Malkenhorst.

The city of Vernon is small. But for a long time, pay there was big. So big, in fact, that Malkenhorst – a Huntington Beach resident – was earning $529,536 as Vernon's city manager, finance director, redevelopment director, city clerk, city treasurer, and head of the municipal light and power operation – all pretty much at the same time.

So when Malkenhorst (pictured at right, in 1977) retired in 2005, he was soon pulling down a pension in excess of $500,000 from the California Public Employees Retirement System. Which made him the top-paid public pensioner in the entire Golden State. And, perhaps, anywhere.

The checks continued even after he pleaded guilty in 2011 to misappropriating $60,000 in public funds and using it for political contributions and personal expenses like golf games, massages, a personal trainer and a home security system. (No biggie there: We know that felons can continue to collect their public pensions; former O.C. Sheriff Mike Carona gets about $218K a year even in prison, and convicted former Treasurer/Tax Collector Robert Citron was getting about $150,000 a year when he recently passed away).

But a half-million dollars a year, for life, for the head of a tiny city with only 113 residents? That struck even CalPERS as a bit odd. Six or so years later than it should have, perhaps, but one might say better late than never.

CalPERS launched a review of Malkenhorst's retirement allowance last year, noting that while Vernon reported his monthly pay rate at $35,302, plus an $8,826 "longevity payment," CalPERS could only find $7,875 that fit the legal definition of "pay rate," plus a 20 percent "longevity payment."

In an eight-page letter detailing its findings, CalPERS slashed the amount on which Malkenhorst's pension could be based from that $44,128 to $9,654 per month.

On paper, Malkenhorst's pension shriveled from $530,268 to $115,000 a year, which Malkenhorst dubbed "elder abuse" in a chat with our colleague Tony Saavedra last year.

So Malkenhorst filed suit against CalPERS in both Orange County and Los Angeles superior courts making various legal arguments, including that CalPERS has no power to take this sort of action because Vernon is charter city, and that CalPERS had already reviewed and approved his pension and can't change its mind.

Malkenhorst lost in both courts, and both cases are on appeal.

Here's the thing: Though CalPERS data now shows Malkenhorst at the new, lower pension rate, he is, in fact, still receiving that $530K per year and will continue to receive it until the legal cases are settled.

If CalPERS prevails, it will then seek to collect overpayments from Malkenhorst. Which translates to some $3 million over the eight years since Malkenhorst retired, by our calculations. Which may, or may not, be a difficult thing to do.

We called and emailed Malkenhorst and his attorney but haven't heard back.

Vernon, flying largely below the radar, has suffered many a scandal, eventually brought to light by our colleagues at the Los Angeles Times. Former city administrator Donal O'Callaghan pleaded guilty in 2011 to felony conflict-of-interest charges related to the hiring of his wife as a contractor, and relatives of Vernon officials were hired through a contractor called Project Labor Group, including Malkenhorst's children. The city spent tens of millions of dollars on lawyers and made bad bets through its power utility.

When legislators accused Vernon of operating like an insular fiefdom for the benefit of a few officials and tried wipe it out of existence – making it part of Los Angeles – the city launched an expensive bid to beat back its own extinction and launched many reforms. It prevailed, and the city, according to its new guard, is on the path to healing.

But there's still Malkenhorst.

No more 'funny business'

CalPERS spokesman Ed Fong noted that Malkenhorst retired in 2005 before there was much public scrutiny of official compensation.

"We didn't have these more stringent procedures in place years ago," Fong said. "Since that time, our policies and procedures have changed and we've tightened up. It's much more difficult now to get away with this sort of thing, so to speak."

Specifically, CalPERS now flags anything that would result in pension payments of more than $100,000 a year and gives them a closer look, Fong said, "to make sure there's no funny business."

That $100K club includes a growing number of pensioners, as public-safety types and higher-paid officials under more-generous retirement formulas enter their golden years. We're waiting for the most recent numbers from CalPERS on the $100K club and will bring that to you soon.

Before you cuss CalPERS, however, remember this: CalPERS administers the retirement system. It did not make the decisions on how much to pay public workers or how generous a retirement formula to bestow upon them. For that, you can thank your local elected officials.

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